Hit by U.S. tariffs and the blacklisting of Chinese telecom supplier Huawei, Beijing recently found a way to send a threatening trade message: with a visit by Chinese President Xi Jinping to a rare-earths processing plant.

An editorial in the official People’s Daily newspaper on the subject warned, “Don’t underestimate China’s ability to strike back.” The newspaper even used a phrase, translated as “don’t say we didn’t warn you,” previously employed just before border wars with India and Vietnam.

Many investors and politicians outside China took Xi’s factory visit and the editorial as a signal that if the Trump administration doesn’t back down in the trade war, China will suspend exports to the United States of rare earths. The 17 elements, such as yttrium and neodymium, have wonderful magnetic and luminescent properties that are extremely useful, even in tiny amounts, for many high-tech applications.

The Chinese threat set off alarms over potential havoc in U.S. technology and defense industries. But, as a practical matter, China’s cutting off rare-earths shipments to the United States would likely be of limited consequence.

In the past few years, Chinese companies have mined more than 70 percent of the world’s total production of rare-earth ore. Some non-Chinese mines have also shipped ore to China, so processing companies there have made an even higher portion of the world’s high-purity rare-earth oxides.

The total global market for rare-earth oxides is only about 150,000 tons a year — an amount of material that could fit into a single large ship. The total value of the global rare-earths trade is only a few billion dollars. It matters a great deal to individual companies but is minuscule in the global economy.

Yet rare earths turn into magnets used in electric motors and generators, which go into electric cars and wind turbines; they also go into batteries and lasers and sensors. Important products.

But it is not clear how the Chinese government could readily upset the industries that make those products by depriving the United States of rare-earth shipments. The United States imports only a small amount of rare-earth oxides, and those imports are more likely to be used to somewhat improve the efficiency of oil refining than as an input to manufacturing high-profile, high-tech products.

Chinese rare-earth oxides are generally turned into magnets or motors or other downstream products, either in China or elsewhere, before they are sent to the United States. To disrupt the trade relationship with the United States, China would have to ban exports of many products, not just rare earths themselves.

In some cases, like the rare-earth content of Apple’s iPhones, the final assembly of the consumer product takes place in China; to stop those rare earths from getting to U.S. consumers, China would have to ban consumer product exports. Perhaps the Chinese government would contemplate banning iPhone sales in a huge trade conflagration, but at that point, access to rare earths would be the least of America’s concerns.

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The various mechanisms through which the global market would adjust to a Chinese embargo take time, effort and money. But that is the sort of inefficiency created in global markets whenever governments intervene.

Beijing may even be playing into the Trump administration’s hands if it goes after rare earths. The administration has periodically aired its concerns about vulnerabilities caused by a U.S. dependence on Chinese rare earths. Defense Department and White House officials have used the topic as a talking point in a campaign to exercise national security provisions in U.S. law that allow the government to impose tariffs and to offer subsidies to U.S. industry.

Of course, if China indeed disrupts rare-earth trade, the Trump administration’s warnings will appear vindicated, making it easier to justify its next steps in the trade war, citing national security grounds in imposing tariffs and subsidies. The Trump administration is ready for a Chinese escalation.

Let’s hope that cooler heads prevail on both sides of the Pacific, because an overreaction to a high-profile spat over rare earths could bring measures that impose much bigger economic costs.

Eugene Gholz is an associate professor of political science at the University of Notre Dame.

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